Rate cutting tax reforms and corporate tax competition in Europe


Heinemann, Friedrich ; Overesch, Michael ; Rincke, Johannes


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URL: http://ub-madoc.bib.uni-mannheim.de/2006
URN: urn:nbn:de:bsz:180-madoc-20065
Document Type: Working paper
Year of publication: 2008
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: H20 H25 H71 ,
Subject headings (SWD): Körperschaftsteuer , Steuerreform , Steuertarif , Steuerwettbewerb , Europa
Keywords (English): Tax reform , tax competition , corporate taxes
Abstract: While there is a large and growing number of studies on the determinants of corporate tax rates, the literature has so far ignored the fact that the behavior of governments in setting tax rates is often best described as a discrete choice decision problem. We set up an empirical model that relates a government's decision whether to cut its corporate tax rate to the country's own inherited tax and taxes in neighboring countries. Using comprehensive data on corporate tax reforms in Europe since 1980, we find evidence suggesting that the position in terms of the tax burden imposed on corporate income relative to geographical neighbors strongly affects the probability of rate cutting tax reforms. Countries are particularly likely to cut their statutory tax rate if the inherited tax is high and if they are exposed to low-tax neighbors.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Heinemann, Friedrich ; Overesch, Michael ; Rincke, Johannes (2008) Rate cutting tax reforms and corporate tax competition in Europe. Open Access [Working paper]
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